Why are we still paying so much for fuel?

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Genie4x4
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Why are we still paying so much for fuel?

Postby Genie4x4 » Fri Oct 31, 2008 6:16 pm

I put this question to MARK STOCKDALE | SENIOR POLICY ANALYST
The New Zealand Automobile Association Incorporated

If oil prices have gone down by well over 50% why are pump prices still well higher even with taking into account the nzd being down. I mwould have thought the cost of petrol to be around $1.20 now. Costs offshore for production should have dropped with the oil price dropping.

If diesel incurs no tax then why isn't it at the price of petrol less the tax eg 40% less?

Marks reply:
The international price for refined petrol has dropped by about 56% since the record high in early July, but the cost of the product only represents about 43% of the final pump price. The rest is made up of taxes (42%), freight, and oil company margin. So if international prices are down 56%, at best we could expect the pump price to drop about 24% (56% of 43% product cost). In fact prices have fallen 21%, or 46c since then. But then you have the impact of the exchange rate. In July the NZ$ was worth 76 US cents, now its worth 58c; that’s a 23% drop. If the exchange rate had remained at US$0.76c, then 91 petrol would be retailing for about $1.48/litre now, and diesel $1.04/litre.

So, taking these variables into account, we can see that the current prices are about right. How we know that is by comparing the oil company ‘importer’ margin – the difference between the pump price less the import cost (adjusted for the exchange rate), less taxes and freight etc. The margin is within the normal range – and within a couple of cents of the margin the last time crude prices were this low (back in February 2007). In actual fact, if the Kiwi$ recovers another cent or two, then we think there will be enough room in the importer margin for another (5c?) drop at the pump. To check for yourself, the Ministry of Economic Development publishes this data: http://www.med.govt.nz/templates/Conten ... 38614.aspx

To answer your question about diesel, the international price moves independently of petrol. In fact a barrel of diesel currently costs 21% more, in part because it costs more to refine and has a higher energy content. At today’s prices, if you added the same taxes as petrol, the retail price would be about $1.99/litre compared to $1.73 for petrol.

I then asked:
I guess its an urban myth that petrol costs more and requires more to refine than diesel?

Mark replied:
Its been that way for a long time, used to be the other way round – that’s why you used to see more black smoke out of the back of diesel exhausts. Not any more, unless its an old dunger that hasn’t had a filter change in years. (cough cough Rhys? )

So there you have it the cost of fuel demystified

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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Fri Oct 31, 2008 7:32 pm

Because Helen has cranked up about 20c/litre of additional taxes since she's been in power. :wink:

Did I mention the ~25% increase in RUC as well?

They use the excuse that cars are getting more fuel efficient so they need to raise the petrol tax to keep the same amount of money coming in. Yet diesels pay by the km driven, so they shaft us anyway.
Guess us diesel owners will end up paying for Helens new broken train set.

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Re: Why are we still paying so much for fuel?

Postby Genie4x4 » Fri Oct 31, 2008 7:48 pm

Well I guess we wouldnt have to pay for the train set if lange didnt sell it off in the first place to pay for muldoons think big.......then i would rather see a billion dollars of tax payers money being spent in nz than going to some obscure little country to pay them for our carbon credits because the ozzies still owned the rail and we werent utilising it......look at the big picture, govts don't make big decisions lightly they are privvy to far more than we give them credit for.

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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Fri Oct 31, 2008 8:07 pm

Genie4x4 wrote:Well I guess we wouldnt have to pay for the train set if lange didnt sell it off in the first place to pay for muldoons think big.......then i would rather see a billion dollars of tax payers money being spent in nz than going to some obscure little country to pay them for our carbon credits because the ozzies still owned the rail and we werent utilising it......look at the big picture, govts don't make big decisions lightly they are privvy to far more than we give them credit for.


The money spent on the trainset won't be staying here.
There are no locomotive makers in NZ. No iron ore mines either. We might pick up some labour maintaining the tracks.

It's a global economy these days, money goes offshore, money comes back in. Buying back poor performing businesses (throwing money straight overseas) at grossly inflated prices is not helping us.

Taxing more efficient modes of transport to make a less efficient method competitive is helping no-one.

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Re: Why are we still paying so much for fuel?

Postby Nikolai_V » Mon Dec 08, 2008 2:06 pm

Heres some facts for you.

We don't actually collect enough revenue from roading to maintain our current rate of spend on our asset.

Trucks are not currently charged for the actual degradation they cause our highways / roads and are in fact subsidised by other road users.

Trucking in this country is subsidised in this manner more than rail fright i.e. trucks pay less of their true cost than rail does in terms of paying for the asset they travel on.

IMHO an increase in taxation will be required for transport to cover the shortfall in funding, specifically due to depressed demand and more fuel efficient vehicles, not to mention modal shift.

The previous poster is correct in that locomotive engines and control gear arent made here, but rolling stock and carriages are, and we have heavy maintenence capability at Hillside (Dunedin) and the yard in Wellington.

There arent any domestic truck manufacturers either...

Diesel in NZ is still cheap, as is petrol - just go to europe and see the impact real fuel taxes have on fuel prices. If we want that level of roading infrastructure without the population base, say hello to $2++ a litre.

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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Mon Dec 08, 2008 4:49 pm

Nikolai_V wrote:Heres some facts for you.

We don't actually collect enough revenue from roading to maintain our current rate of spend on our asset.

Trucks are not currently charged for the actual degradation they cause our highways / roads and are in fact subsidised by other road users.


Where do you source this information from?
The last I heard the "working party" on transport funding hasn't yet delivered their verdict. The last set of figures for road transport tax included a large chunk of "externalities" which are hard to verify and added millions to the cost. If you lump in enough externalities you can say that transport doesn't pay for itself.

But given the trainset is bought with tax-payer dollars (not a bank loan which will be repaid by customers who require things freighted) it's quite clear that rail doesn't pay for itself at all.

Nikolai_V wrote:IMHO an increase in taxation will be required for transport to cover the shortfall in funding, specifically due to depressed demand and more fuel efficient vehicles, not to mention modal shift.


Maybe you've forgotten that diesel vehicles (i.e. trucks) pay road tax on a distance travelled basis. Their fuel efficiency has no impact on the revenue collected.
The road tax is based heavily on the axle weight of the trucks and trailers. So they do indeed pay proportionally for the amount of road degradation they cause.
That argument only applies to light petrol vehicles, very few of which are competing with rail.

Last I checked, salaries in NZ don't compare with salaries in europe either.

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Re: Why are we still paying so much for fuel?

Postby Genie4x4 » Mon Dec 08, 2008 5:31 pm

If the rail is bought with tax payers money how is that different from a loan or worse than a loan?
1 If you borrow the money you are giving the interest to someone else
2 if it is tax payers money and is an SOE or even a % share owned by the govt then the govt is in a win /win it gets both part profit or part divdend and the tax from the profits and no one else gets any for repayment of loans interest.

We are no longer in the 70's & 80's, govt owned and part owned enterprises are required to make a profit. Personally I would rather see NZ dollars invested in NZ infrastructure, than overseas interests bleeding us dry. I saw one of the new paint jobs on a train the other day and it made me proud to see it back in Kiwi ownership with a fern on it.

If rail is good for jobs and the earth then bring it back and use it, get rid of trucks. Roads will be in better shape and the air cleaner but we must make sure the drivers have other jobs to go to. We only have lots of trucks because the rail used to be so inefficient. Bring back trams and trains and put diesel generators in the road vehicles! :D

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Re: Why are we still paying so much for fuel?

Postby mike » Mon Dec 08, 2008 6:15 pm

Anyone notice as the price of oil is going down the bigger savings you are getting at the supermarket with petrol vouchers. I saw a 25c one the other day!! If we didnt have to buy lots of groceries to get savings maybe petrol would be a little cheaper ??
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Re: Why are we still paying so much for fuel?

Postby sig » Mon Dec 08, 2008 7:34 pm

petrol is going down but lpg is still expensive
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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Mon Dec 08, 2008 9:33 pm

Genie4x4 wrote:If the rail is bought with tax payers money how is that different from a loan or worse than a loan?

Because loans have to get repaid, when was the last time the govt repaid some of your tax because it's investments were going so well?

Genie4x4 wrote:If rail is good for jobs and the earth then bring it back and use it, get rid of trucks. Roads will be in better shape and the air cleaner but we must make sure the drivers have other jobs to go to. We only have lots of trucks because the rail used to be so inefficient. Bring back trams and trains and put diesel generators in the road vehicles! :D


How is rail good for jobs and the earth? Rail suffered and virtually died because it wasn't as efficient as trucking. Everything that goes on a train has to be trucked to the train, then from the train to it's final destination. It's not hard to see that cutting the train out the middle of that process cuts out a massive amount of double and triple handling.

Our country doesn't have the massive distances between centres that make rail economic.

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Re: Why are we still paying so much for fuel?

Postby Nikolai_V » Mon Dec 08, 2008 11:12 pm

If we made trucking pay the full costs involved in their use of the road / state highway network I can tell you that the difference in cost would be negligible, and likely in favour of rail. Given the ability to electrify the main trunk, and likely future increases in fossil fuel costs and supply bottlenecks, I wouldn`t condemn rail...

Don`t believe everything Tony Friedlander tells you - the real numbers are well known at the Ministry of Transport with regard to how much trucks should be charged for their use of the roading network, and as for why they agreed to conduct a study in the first place, look at all the stink caused last time. No politician wants to be involved in that (look where that got them...)

Trucks currently only pay in the order of 60% of their actual costs in terms of the infrastructure they use, while rail is around 81%

When we design pavements, we ignore anything under 4.5t when calculating loads, as the ratio of wear and tear for a loaded truck compared to a car is approx 10,000 : 1.

RUC`s are a good idea, they just need to be tweaked to reflect the true costs of road use.

Also even with full hypothecation (i.e. all roading revenue and excise duty being dedicated for transport) the funds just arent there to carry on with the infrastructure investment we need.

The money needs to come from somewhere, would you rather pay more for your petrol and rego to subsidise trucking companies (which is the current state of affairs) or have every one pay the true cost which would likely see a lot more linehaul freigh by rail...?

No-one disputes that trucks are needed to transport goods around town and to and from railheads, but linehaul freight should be on rail.

As for where I get my information - I am a roading engineer personally, and where I work I have easy access to info from the MOT, and this subject is a particular interest of mine, as I`ve done a lot of pavement design.

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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Tue Dec 09, 2008 8:13 pm

Nikolai_V wrote:If we made trucking pay the full costs involved in their use of the road / state highway network I can tell you that the difference in cost would be negligible, and likely in favour of rail. Given the ability to electrify the main trunk, and likely future increases in fossil fuel costs and supply bottlenecks, I wouldn`t condemn rail...


This country doesn't even have enough power to electrify our homes properly in winter. Some trains drawing megawatts at a time will need some serious infrastructure investment first.

Nikolai_V wrote:Don`t believe everything Tony Friedlander tells you

Who's He? Name is vaguely familiar.

Nikolai_V wrote:When we design pavements, we ignore anything under 4.5t when calculating loads, as the ratio of wear and tear for a loaded truck compared to a car is approx 10,000 : 1.

Is that a 4.5t axle load, tyre load or complete vehicle?
The roads here don't wear out as such, they break up. Usually from water ingress which then freezes. Erosion is a big problem too. Seems like 3/4 of the engineers on the west coast here are in roading.

Nikolai_V wrote:RUC`s are a good idea, they just need to be tweaked to reflect the true costs of road use.

So what are the chances of small diesel cars not having to pay 4 cents per km? Colour me cynical but I can see trucking costs going up, which gets passed onto consumers and no costs going down.
The largest cost in registration is ACC.

Nikolai_V wrote:No-one disputes that trucks are needed to transport goods around town and to and from railheads, but linehaul freight should be on rail.

At what distance is it economical to rail freight? At which point do the extra truck miles (from pickup to depot and depot to dropoff) become offset by the savings in rail?
This is answered by the bigger question, what are the cost savings in rail over road? If we knew this and the costs involved then we could work out the distances necessary for rail to be competitive.

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Re: Why are we still paying so much for fuel?

Postby nivaman » Sun Feb 01, 2009 5:45 am

And it's going up again :roll:

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Re: Why are we still paying so much for fuel?

Postby BrentC » Sun Feb 01, 2009 6:20 am

Nikolai_V wrote:No-one disputes that trucks are needed to transport goods around town and to and from railheads, but linehaul freight should be on rail.



Not in NZ - rail is crap - has always been crap and will always be crap - plus never in my lifetime will the B-Train a day we shift Chch to Auck be put on crappy, slow, inefficient, expensive rail. People who promote rail use the wrong oversas modelling - we don't have the one or two bulk product to make rail line haul efficient, we also don't have a good guage width or tunnel size.

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Re: Why are we still paying so much for fuel?

Postby Moriarty » Sun Feb 01, 2009 2:48 pm

Having spent many many happy days months sitting up in the high country east of the SH1 between Turangi and Waiouru,
watching the stars clouds TRUCKS etc. I have to wonder at the logic of long haul trucking.

Camp up there sometime, brave the night's chill and watch and listen,,,

endless trucks going both north and south. FKN ENDLESS!!!
They are going from AKL to WTN and WTN to AKL. endlessly
hundreds and man, do I mean HUNDREDS... how much fuel? you know, that stuff that is supposed to be running out....

How much fuel does a nice big train use to take a hefty amount of those same containers on their holiday?
Ok, there is the locAL HAULAGE COSTS, LARGELY OFFSET BY THE SAME LOCAL HAULAGE COSTS TO AND FROM A TRUCK DEPOT ANYWAY. wHY NOT TAKE EM TO A RAIL DEPOT INSTEAD?
fkn capslock....

What damage to a hard to maintain road that's laid over pumice and other volcanic substrata for 25% of its length?
Compare that to maintaining rail...

bigger and bigger trucks on roads definitely NOT designed for trucks, a and b trains on our narrow roads frightening the POO out of little old ladies and even big old men.....

wonder how many kilometers per litre a train uses, express it in tonne/KM/fuel usage etc.
compare THAT to say, 300 trucks, a conservative estimate of the traffic over that Waiouru mid-point.

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Re: Why are we still paying so much for fuel?

Postby T-Boon » Wed Feb 04, 2009 3:30 am

Was watching BBC at an obscure time this morning, and saw the headline "BP's profits up 39%"

Yeah, theyre not making much are they...
To Boon or not to Boon.

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Re: Why are we still paying so much for fuel?

Postby SV1K » Wed Feb 04, 2009 6:31 am

Good point Bob, but you are only talking about NZ here, what about Aussie, USA and Europe?? There are more trucks there than here.....

See the price of petrol has gone up another .06 as well over night! Funny thing is we still seem to buy and use it all the same... and we go hungry because we can't afford to buy food! lalalalalalala

rant over

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Re: Why are we still paying so much for fuel?

Postby nivaman » Wed Feb 04, 2009 7:39 am

Wonder what would happen if we get our heads together to design a system that doesn't need petrol or diesel, what would the boffins say then?.
And the governments in their brilliance (and loss of profit) would say thats illegal so we would prob still be sucking back petrol/diesel at a profit to the government :roll: .

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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Wed Feb 04, 2009 10:31 am

nivaman wrote:Wonder what would happen if we get our heads together to design a system that doesn't need petrol or diesel, what would the boffins say then?.
And the governments in their brilliance (and loss of profit) would say thats illegal so we would prob still be sucking back petrol/diesel at a profit to the government :roll: .


If it doesn't use petrol or diesel, what's going to power it?

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Re: Why are we still paying so much for fuel?

Postby Moriarty » Wed Feb 04, 2009 11:14 am

KiwiBacon wrote:
nivaman wrote:Wonder what would happen if we get our heads together to design a system that doesn't need petrol or diesel, what would the boffins say then?.
And the governments in their brilliance (and loss of profit) would say thats illegal so we would prob still be sucking back petrol/diesel at a profit to the government :roll: .


If it doesn't use petrol or diesel, what's going to power it?


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my very favourite is.....


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Re: Why are we still paying so much for fuel?

Postby KiwiBacon » Wed Feb 04, 2009 12:28 pm

Moriarty wrote:my very favourite is.....


MAGIC


That's my favourite too. :lol:

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Re: Why are we still paying so much for fuel?

Postby SV1K » Wed Feb 04, 2009 4:23 pm

Moriarty wrote:very long extensions leads trailing all over the place,


:lol: :lol: Saw that once when I was driving through Paraparaumu, a mobility scooter with a extension cord hanging out the back of it .... was funny as...
8)

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Re: Why are we still paying so much for fuel?

Postby nivaman » Thu Feb 05, 2009 8:28 am

KiwiBacon wrote:
nivaman wrote:Wonder what would happen if we get our heads together to design a system that doesn't need petrol or diesel, what would the boffins say then?.
And the governments in their brilliance (and loss of profit) would say thats illegal so we would prob still be sucking back petrol/diesel at a profit to the government :roll: .


If it doesn't use petrol or diesel, what's going to power it?

Dunno you decide :lol: .

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